Barclays Bank to sell shares in African operations
This week, following months of speculation over Barclays’ potential exit from the African market, the bank announced its plan to sell all of the 62.3 percent of shares it owns in Barclays Africa Group over the next two to three years. Barclays Africa, listed in Johannesburg, is a subsidiary company of British investment bank Barclays, which has been operating in Africa for over 90 years. Barclays currently employs 45,000 people and holds $70 billion in assets in Africa. Jes Staley, chief executive officer of Barclays provided two explanations behind selling their shares in the Africa business. First, the bank is currently aiming to restructure its operations and focus them around the United Kingdom and the United States. Second, while Barclays owns 62.3 percent of Barclays Africa shares (and thus retains only two-thirds of the profits), it carries 100 percent of the operations’ risks including liabilities, which reduces return on equity and also means that Barclays must hold enough capital to protect against any losses suffered by Barclays Africa due to international rules. Selling the shares in Barclays Africa will essentially allow Barclays to free up this capital for other uses.
As Barclays’ exit from the continent—and the investor anxiety that accompanies it—may seem to challenge the “Africa Rising” narrative, the bank’s decision to withdraw speaks more to the current state of Barclays operations than to Africa’s macroeconomic climate, according to some experts. “It is not an Africa problem; rather it’s a Barclays problem,” said Ayso Van Eysinga, a researcher at Eurasia Group. In 2015, Barclays itself reported a net annual loss of $550 million. Amid such financial woes, the bank also plans to scale back its operations in Asia.
Nigeria removes ghost workers from payroll, trimming millions of dollars in personnel costs
President Muhammadu Buhari’s campaign to root out government corruption scored a notable victory this week as the Nigerian Ministry of Finance announced on Sunday, February 28, that it removed 23,846 non-existent workers from the government payroll. The so-called “ghost workers” were uncovered through a Finance Ministry audit of account holders receiving government wages. Using biometric data and bank verification numbers, auditors revealed that some of the names of government workers did not match the names linked to bank accounts, and, in fact, some accounts were receiving salaries from multiple non-existent workers. The finance ministry has already reviewed 312,000 government workers and will continue to perform routine checks while implementing more robust monitoring techniques to prevent further abuse of the payroll system.
As a result of eliminating non-existent workers, the February 2016 salary bill fell by $11.5 million (2.3 billion naira) when compared with the December 2015 salary bill, which was before the audit took place. A Finance Ministry advisor, Festus Akanbi, stated that cutting personnel costs and enforcing stricter payroll regulation “is key to funding the deficit in the 2016 budget” especially considering that personnel costs account for 40 percent of Nigeria’s government expenditures.
The East African Community gains South Sudan as member
The East African Community (EAC) held its 17th ordinary summit on Wednesday, March 2 in Arusha, Tanzania after it was postponed on multiple occasions due to the turmoil in Burundi. The summit was attended by all the heads of state of the EAC except Burundi’s President Pierre Nkurunziza, who has not traveled outside of Burundi since May 2015 (around the time of an attempted coup against him). During the summit, the EAC secretariat announced the country’s application review complete and approved the application for the admission of the Republic of South Sudan. South Sudan had applied for EAC membership soon after gaining independence in 2011. Somalia has also applied and was reviewed, but no decision on its admission was made since discussions with the Somalian government are still ongoing.
After the announcement, South Sudan’s Vice President James Wani Igga commented on the potential economic benefits of the EAC membership and greater regional integration for the country (for example, the expansion of regional markets, trade, and investment) and also the historical significance of the decision, proclaiming that the “EAC is where we belong.” Still, as some experts note, South Sudan will have to work with its EAC partners to build institutions, improve rule of law, and resolve insecurity—which has ravaged the country’s society and economy in recent years—in order to realize the full benefits of regional integration.
A review of progress in the implementation of key outstanding decisions and other policy issues of strategic importance to the EAC took place including discussions on sustainable financing mechanisms for the EAC, the East African Development Bank, and criteria for the import of textiles and leather products. Furthermore, the heads of states officially launched the international East African e-passport, which will be issued from early next year. The summit’s participants also decided to extend Tanzanian President John Magufuli’s tenure as chairperson of the EAC although it was Burundi’s turn.